It said the general elections in May helped lift investor sentiment and business confidence, though it will take a while before this translates into better performance in the real economy.

"Our estimate that GDP grew 5.3 percent in the September quarter is in line with the steady cyclical upswing of recent quarters," Moody's Analytics said in a report.

The official GDP data for the September quarter will be released on Friday. Indian economy grew by 4.8 per cent in the second quarter of the last fiscal, while the growth rate was 4.7 percent for the entire 2013-14 fiscal. In the April-June quarter of this year, GDP growth stood at 5.7 percent.

The growth rate touched sub-5 per cent in 2012-13 and 2013-14.

"The economy's growth reached a recent nadir around the middle 2013 but has been steadily improving since then," it said, adding that downside risks to growth diminished as the government shored up its fiscal position and external account.

Moody's Analytics further said the services sector would continue to expand strongly and drive GDP growth on the production side.

Investment will be key to second quarter performance as corporate spending appears to have expanded further and industrial production of capital goods was slower but still positive.

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